for $18.25 per share in an all-cash deal that values the
company at $1.3 billion.

So what

: The acquisition price represents a meager 9% premium over
Friday’s closing price and is 28% below the stock’s July 2013
all-time high. Note that shares of New Residential are up
almost as much as those of Home Loan Servicing today, which
suggests the market believes the acquirer is capturing a
significant value in the transaction.

Indeed, based on the daily price chart I’m looking at, it
appears Home Loan Servicing Solutions ;shares have been
trading at or above New Residential’s offer price since shortly
after 10 a.m. EST. That suggests that the market might expect
some (but not much) improvement on the offer.

However, the statement from Home Loan Servicing
Solutions ;CEO John Van Vlack suggests that he didn’t enter
negotiations with tremendous bargaining power or ambitions [my
emphasis]: “I am pleased that this transactionoffers our investors cash equivalent to the book value of
their shares

and addresses the uncertainty associated with our future
financing obligations.” Getting paid book value is something to
celebrate?

Now what

: For investors who didn’t already own shares of Home Loan
Servicing Solutions, I wouldn’t recommend buying them now —
merger arbitrage (i.e., betting on the completion of announced
transactions) is not an arena for individual investors. For
existing shareholders, it might be worth hanging on to the
shares for a couple weeks to see if a raised offer or new
bidder emerges. Beyond that, it’s probably time to sell and
move on the next opportunity. New Residential’s acquisition of
Home Loan Servicing Solutions is expected to close in the
second quarter.

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